Opinion: Is LNG B.C.’s big favour?

It’s unlikely exports will reduce global greenhouse gas emissions

Premier Christy Clark announces a new LNG export facility to be built near Prince Rupert on Nov. 12, 2013, with Nexen CEO Kevin Reinhart, middle, and Rich Coleman.

Photograph by: Ward Perrin
, PNG

Is British Columbia “doing the world a favour,” as Premier Christy Clark put it, by developing a liquefied natural gas export industry? Or is this just wishful thinking from a government that has abandoned its law on reducing carbon emissions to pursue LNG riches?

Natural gas is a cleaner burning fossil fuel than coal, in terms of carbon pollution as well as other emissions that lead to smog and acid rain. In the United States, substitution of gas for coal in electricity generation has led to declining carbon emissions in recent years. So it is plausible the same could be true for Asia, enabling essentially unlimited LNG exports in the name of climate action.

For B.C.’s LNG exports to lower global emissions, they would need to be part of a deliberate effort to use natural gas as a transition fuel, linked to displacement of coal use in countries such as China, along with a strong regulatory framework to minimize leaks and source renewable power for operations. This is far from the Wild West mentality currently in place on the North Coast.

First, will LNG be a substitute for coal at all? A number of independent projections show a growing appetite in China for all energy sources, including renewables, nuclear and fossil fuels. A new international treaty to constrain carbon emissions, now under negotiation, could change this dynamic in 15-20 years. For now, LNG is anticipated to pile on top of China’s growing coal consumption, rather than displace it.

The transition to natural gas in the U.S. came as a result of record low gas prices in North America. But at the much higher price the B.C. government and the industry expect Asia to pay, coal is way cheaper than LNG. That is, if LNG is to displace coal based on economics, B.C. will need to accept much lower prices and abandon its fantasy of a $100-billion prosperity fund.

Another challenge to the premier’s argument is that LNG may displace other sources of power, in particular nuclear power in Japan. As evident in the 2011 Fukushima disaster, nuclear has major risks. On the other hand, nuclear’s carbon footprint is negligible, so if Japan decides to shift its nuclear capacity to LNG, global carbon emissions would rise.

Leakages also undermine the case for LNG as a transition fuel. Natural gas is primarily methane, a greenhouse gas 86 times more heat-trapping than carbon dioxide over a 20-year period. Leakages of only 1.2 per cent are enough to erase claims of having an advantage over coal.

Typically, from wellhead to final combustion, including processing and transportation, leaks of about two to four per cent are standard. Those leaks can be much higher for fracking operations, the technology that will be used to supply B.C.’s LNG industry.

Strong regulations could reduce the amount of leakage, and allow B.C. to produce the “cleanest LNG in the world,” an aspiration of the B.C. government. If LNG proceeds, such regulations must be part of the deal, even if they impose additional costs on the industry. But B.C. cannot regulate LNG once it leaves port, so leakages will likely erase natural gas’s carbon advantage.

The big picture is that global warming is primarily caused by extracting carbon from underground and putting it into the atmosphere. The government’s LNG ambitions would double or triple the amount of gas extracted in B.C., the equivalent to adding tens of millions of cars to the roads of the world.

B.C.’s estimated marketable gas reserves, if combusted, would be equivalent to 10.6 billion tonnes of carbon dioxide, or about one-third of worldwide annual emissions from burning fossil fuels. It is hard to square LNG with the pressing need to constrain carbon on a global basis.

Pursuing an LNG industry amounts to doubling down on fossil fuels, precisely at the moment when extreme weather events are starting to have significant financial impacts. In our era of climate change, global energy supply must ultimately look beyond fossil fuels, and into renewables and conservation.

A government with its eyes on the future would be leading us down that path. If B.C. really wants to do the world a favour, it must leave most of that natural gas in the ground. Instead, B.C. should drive new investment into low-carbon technologies and infrastructure, and in doing so would create more jobs and leave a sustainable legacy for our grandchildren.

Marc Lee is a senior economist with the B.C. Office of the Canadian Centre for Policy Alternatives, and co-director of the Climate Justice Project, a multi-year research partnership with the University of British Columbia. He is the author of B.C.’s Legislated Greenhouse Gas Targets vs. Natural Gas Development: The Good, The Bad and the Ugly, available at http://www.policyalternatives.ca/natural-gas-ghgs

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